Correlation Between Titan Machinery and Newmont

Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Newmont at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Titan Machinery and Newmont into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Titan Machinery and Newmont, you can compare the effects of market volatilities on Titan Machinery and Newmont and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Titan Machinery with a short position of Newmont. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Newmont.

Diversification Opportunities for Titan Machinery and Newmont

-0.5

Correlation Coefficient

Titan Machinery  Newmont

Very good diversification

The 3 months correlation between Titan and Newmont is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont and Titan Machinery is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Titan Machinery are associated (or correlated) with Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of Titan Machinery i.e., Titan Machinery and Newmont go up and down completely randomly.

Pair Corralation between Titan Machinery and Newmont

Assuming the 90 days horizon Titan Machinery is expected to generate 1.85 times more return on investment than Newmont. However, Titan Machinery is 1.85 times more volatile than Newmont. It trades about 0.01 of its potential returns per unit of risk. Newmont is currently generating about -0.02 per unit of risk. If you would invest  1,390  in Titan Machinery on October 4, 2024 and sell it today you would lose (80.00) from holding Titan Machinery or give up 5.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Titan Machinery  vs.  Newmont

Titan Machinery

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Titan Machinery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Titan Machinery and Newmont

The main advantage of trading using opposite Titan Machinery and Newmont positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, Newmont can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Newmont will offset losses from the drop in Newmont's long position.

The idea behind Titan Machinery and Newmont pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.